NHS financial performance 2012/13...Most of the funding (£10.9 billion) was allocated to the 14 territorial health boards that serve each area of Scotland and provide direct patient
44
NHS financial performance 2012/13 Prepared by Audit Scotland October 2013
Auditor General for ScotlandThe Auditor Generalrsquos role is to
bull appoint auditors to Scotlandrsquos central government and NHS bodiesbull examine how public bodies spend public moneybull help them to manage their finances to the highest standards bull check whether they achieve value for money
The Auditor General is independent and reports to the Scottish Parliament on the performance of
bull directorates of the Scottish Government bull government agencies eg the Scottish Prison Service Historic Scotland bull NHS bodiesbull further education colleges bull Scottish Water bull NDPBs and others eg Scottish Police Authority Scottish Fire and
Rescue Service
You can find out more about the work of the Auditor General on our website wwwaudit-scotlandgovukaboutags
Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability (Scotland) Act 2000 We help the Auditor General for Scotland and the Accounts Commission check that organisations spending public money use it properly efficiently and effectively
NHS financial performance 201213 | 3
Contents
Summary 4
Key messages 9
Financial performance and sustainability 11
Endnotes 39
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital 41
Appendix 2 Financial performance of NHS boards in 201213 ndash Revenue 42
Appendix 3 Financial performance of NHS boards in 201213 ndash Capital 43
Exhibit data
When viewing this report online you can access background data by clicking on the graph icon The data file will open in a new window
4 |
Summary
Key facts
pound109billion
Total amount spent by NHS boards in 201213
pound17million surplus
Overall performance against budget in 201213
pound270million
Total amount of savings achieved in 201213
pound268million
Total amount of savings that NHS boards will need to break even in 201314
pound56billion
Total spent on staff costs in 201213
133205WTE
Total number of NHS staff in 201213
Summary | 5
Background
1 The Scottish Government spent pound119 billion on health and wellbeing in 201213 35 per cent of Scotlandrsquos total public sector spending The total budget for the Scottish Governmentrsquos Health and Wellbeing Portfolio includes the budgets for health sport and equalities Most of the funding (pound109 billion) was allocated to the 14 territorial health boards that serve each area of Scotland and provide direct patient care and nine special health boards that provide national services1 In this report we refer to these collectively as NHS boards The Scottish Government manages the Health and Wellbeing Portfolio budget as a whole It allocates funding to the NHS boards and oversees their financial performance This includes monitoring NHS boardsrsquo financial performance on a monthly basis (Exhibit 1 page 6)
2 Over the last ten years the overall health budget has increased in cash terms that is not taking inflation into account It increased by 22 per cent in cash terms from 201112 and by 06 per cent in real terms taking inflation into account The overall health budget is forecast to decrease by 16 per cent in real terms over the next three years (Exhibit 2 page 7) However there are significant differences between the forecasts for the capital and revenue budgets The revenue budget is forecast to increase by 06 per cent over the next three years in real terms while the capital budget is forecast to decrease by 61 per cent in real terms over the same period
3 Territorial boards continue to receive small real-terms increases (06 per cent in 201314) but these are lower than in previous years (Exhibit 3 page 8) The Scottish Government has reduced some special boardsrsquo budgets and redirected these funds to territorial boards and special boards which provide direct patient care
4 In October 2012 we reported that all 23 NHS boards in Scotland broke even in 201112 with a small overall surplus of pound134 million (012 per cent of the total budget)2 However this involved money being moved between NHS boards during the year and this was not clearly reported in the NHS boardsrsquo annual accounts NHS boards must break even each year which means their income must equal their expenditure This requirement can lead to a short-term focus and we recommended that the NHS increases its focus on longer-term financial planning The report highlighted a number of risks to financial management in the future particularly that boards need to increase the amount of recurring savings that they make
5 This is a challenging time for NHS boards While budgets are getting tighter demand for healthcare is rising due to an ageing population more people with long-term conditions and the impact of factors such as increasing rates of obesity This presents significant challenges for NHS boards delivering services both now and in the longer term The number of people of pensionable age is estimated to increase by about 26 per cent by 2035 meaning that a quarter of Scotlandrsquos population will be over 65 by that time The number aged 75 and over is projected to increase by 82 per cent3 The number of people with a long-term condition increases with age Over 62 per cent of 65ndash69 year olds report having a long-term condition increasing to 68 per cent of 75ndash79 year olds4 These population changes are placing more demands on unscheduled care (emergency and urgent care) In February 2013 the Scottish Government launched the Emergency Care Action Plan and announced that it would invest pound50 million over the next three years to improve unscheduled care
6 |In
-yea
r
Exhibit 1Overview of financial management in the NHS in ScotlandThe Scottish Government allocates most of the health budget to NHS boards and monitors how much they are spending throughout the year
Source Audit Scotland
Health and
Wellbeing PortfolioBudget of pound119 billion in
201213 of which
How budgets change each yearBoards receive additional allocations in-year includingbull brokerage (advance on
future years funding)bull return of prior year surplusbull programme-specific fundingbull new initiatives funding
Boards must not breach the following financial limitsbull Revenue Resource Limit
(revenue budget)
bull Capital Resource Limit (capital budget)
NHS boards pound109 billion
NHS board produces annual
accountsyear
-end
Performance managementPerformance against LDPs is monitored throughout the year using
bull Financial Performance ReturnsThese detailndash progress against targets
(including savings targets)ndash financial performance to datendash forecast final expenditure
bull Formal mid-year and annual reviews
NHS boards produce local delivery plans (LDPs)These include
bull financial and performance targets
bull a financial plan including savings
bull a performance plan
Signed off by Scottish Government
Fina
ncia
l
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
Auditor General for ScotlandThe Auditor Generalrsquos role is to
bull appoint auditors to Scotlandrsquos central government and NHS bodiesbull examine how public bodies spend public moneybull help them to manage their finances to the highest standards bull check whether they achieve value for money
The Auditor General is independent and reports to the Scottish Parliament on the performance of
bull directorates of the Scottish Government bull government agencies eg the Scottish Prison Service Historic Scotland bull NHS bodiesbull further education colleges bull Scottish Water bull NDPBs and others eg Scottish Police Authority Scottish Fire and
Rescue Service
You can find out more about the work of the Auditor General on our website wwwaudit-scotlandgovukaboutags
Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability (Scotland) Act 2000 We help the Auditor General for Scotland and the Accounts Commission check that organisations spending public money use it properly efficiently and effectively
NHS financial performance 201213 | 3
Contents
Summary 4
Key messages 9
Financial performance and sustainability 11
Endnotes 39
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital 41
Appendix 2 Financial performance of NHS boards in 201213 ndash Revenue 42
Appendix 3 Financial performance of NHS boards in 201213 ndash Capital 43
Exhibit data
When viewing this report online you can access background data by clicking on the graph icon The data file will open in a new window
4 |
Summary
Key facts
pound109billion
Total amount spent by NHS boards in 201213
pound17million surplus
Overall performance against budget in 201213
pound270million
Total amount of savings achieved in 201213
pound268million
Total amount of savings that NHS boards will need to break even in 201314
pound56billion
Total spent on staff costs in 201213
133205WTE
Total number of NHS staff in 201213
Summary | 5
Background
1 The Scottish Government spent pound119 billion on health and wellbeing in 201213 35 per cent of Scotlandrsquos total public sector spending The total budget for the Scottish Governmentrsquos Health and Wellbeing Portfolio includes the budgets for health sport and equalities Most of the funding (pound109 billion) was allocated to the 14 territorial health boards that serve each area of Scotland and provide direct patient care and nine special health boards that provide national services1 In this report we refer to these collectively as NHS boards The Scottish Government manages the Health and Wellbeing Portfolio budget as a whole It allocates funding to the NHS boards and oversees their financial performance This includes monitoring NHS boardsrsquo financial performance on a monthly basis (Exhibit 1 page 6)
2 Over the last ten years the overall health budget has increased in cash terms that is not taking inflation into account It increased by 22 per cent in cash terms from 201112 and by 06 per cent in real terms taking inflation into account The overall health budget is forecast to decrease by 16 per cent in real terms over the next three years (Exhibit 2 page 7) However there are significant differences between the forecasts for the capital and revenue budgets The revenue budget is forecast to increase by 06 per cent over the next three years in real terms while the capital budget is forecast to decrease by 61 per cent in real terms over the same period
3 Territorial boards continue to receive small real-terms increases (06 per cent in 201314) but these are lower than in previous years (Exhibit 3 page 8) The Scottish Government has reduced some special boardsrsquo budgets and redirected these funds to territorial boards and special boards which provide direct patient care
4 In October 2012 we reported that all 23 NHS boards in Scotland broke even in 201112 with a small overall surplus of pound134 million (012 per cent of the total budget)2 However this involved money being moved between NHS boards during the year and this was not clearly reported in the NHS boardsrsquo annual accounts NHS boards must break even each year which means their income must equal their expenditure This requirement can lead to a short-term focus and we recommended that the NHS increases its focus on longer-term financial planning The report highlighted a number of risks to financial management in the future particularly that boards need to increase the amount of recurring savings that they make
5 This is a challenging time for NHS boards While budgets are getting tighter demand for healthcare is rising due to an ageing population more people with long-term conditions and the impact of factors such as increasing rates of obesity This presents significant challenges for NHS boards delivering services both now and in the longer term The number of people of pensionable age is estimated to increase by about 26 per cent by 2035 meaning that a quarter of Scotlandrsquos population will be over 65 by that time The number aged 75 and over is projected to increase by 82 per cent3 The number of people with a long-term condition increases with age Over 62 per cent of 65ndash69 year olds report having a long-term condition increasing to 68 per cent of 75ndash79 year olds4 These population changes are placing more demands on unscheduled care (emergency and urgent care) In February 2013 the Scottish Government launched the Emergency Care Action Plan and announced that it would invest pound50 million over the next three years to improve unscheduled care
6 |In
-yea
r
Exhibit 1Overview of financial management in the NHS in ScotlandThe Scottish Government allocates most of the health budget to NHS boards and monitors how much they are spending throughout the year
Source Audit Scotland
Health and
Wellbeing PortfolioBudget of pound119 billion in
201213 of which
How budgets change each yearBoards receive additional allocations in-year includingbull brokerage (advance on
future years funding)bull return of prior year surplusbull programme-specific fundingbull new initiatives funding
Boards must not breach the following financial limitsbull Revenue Resource Limit
(revenue budget)
bull Capital Resource Limit (capital budget)
NHS boards pound109 billion
NHS board produces annual
accountsyear
-end
Performance managementPerformance against LDPs is monitored throughout the year using
bull Financial Performance ReturnsThese detailndash progress against targets
(including savings targets)ndash financial performance to datendash forecast final expenditure
bull Formal mid-year and annual reviews
NHS boards produce local delivery plans (LDPs)These include
bull financial and performance targets
bull a financial plan including savings
bull a performance plan
Signed off by Scottish Government
Fina
ncia
l
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
NHS financial performance 201213 | 3
Contents
Summary 4
Key messages 9
Financial performance and sustainability 11
Endnotes 39
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital 41
Appendix 2 Financial performance of NHS boards in 201213 ndash Revenue 42
Appendix 3 Financial performance of NHS boards in 201213 ndash Capital 43
Exhibit data
When viewing this report online you can access background data by clicking on the graph icon The data file will open in a new window
4 |
Summary
Key facts
pound109billion
Total amount spent by NHS boards in 201213
pound17million surplus
Overall performance against budget in 201213
pound270million
Total amount of savings achieved in 201213
pound268million
Total amount of savings that NHS boards will need to break even in 201314
pound56billion
Total spent on staff costs in 201213
133205WTE
Total number of NHS staff in 201213
Summary | 5
Background
1 The Scottish Government spent pound119 billion on health and wellbeing in 201213 35 per cent of Scotlandrsquos total public sector spending The total budget for the Scottish Governmentrsquos Health and Wellbeing Portfolio includes the budgets for health sport and equalities Most of the funding (pound109 billion) was allocated to the 14 territorial health boards that serve each area of Scotland and provide direct patient care and nine special health boards that provide national services1 In this report we refer to these collectively as NHS boards The Scottish Government manages the Health and Wellbeing Portfolio budget as a whole It allocates funding to the NHS boards and oversees their financial performance This includes monitoring NHS boardsrsquo financial performance on a monthly basis (Exhibit 1 page 6)
2 Over the last ten years the overall health budget has increased in cash terms that is not taking inflation into account It increased by 22 per cent in cash terms from 201112 and by 06 per cent in real terms taking inflation into account The overall health budget is forecast to decrease by 16 per cent in real terms over the next three years (Exhibit 2 page 7) However there are significant differences between the forecasts for the capital and revenue budgets The revenue budget is forecast to increase by 06 per cent over the next three years in real terms while the capital budget is forecast to decrease by 61 per cent in real terms over the same period
3 Territorial boards continue to receive small real-terms increases (06 per cent in 201314) but these are lower than in previous years (Exhibit 3 page 8) The Scottish Government has reduced some special boardsrsquo budgets and redirected these funds to territorial boards and special boards which provide direct patient care
4 In October 2012 we reported that all 23 NHS boards in Scotland broke even in 201112 with a small overall surplus of pound134 million (012 per cent of the total budget)2 However this involved money being moved between NHS boards during the year and this was not clearly reported in the NHS boardsrsquo annual accounts NHS boards must break even each year which means their income must equal their expenditure This requirement can lead to a short-term focus and we recommended that the NHS increases its focus on longer-term financial planning The report highlighted a number of risks to financial management in the future particularly that boards need to increase the amount of recurring savings that they make
5 This is a challenging time for NHS boards While budgets are getting tighter demand for healthcare is rising due to an ageing population more people with long-term conditions and the impact of factors such as increasing rates of obesity This presents significant challenges for NHS boards delivering services both now and in the longer term The number of people of pensionable age is estimated to increase by about 26 per cent by 2035 meaning that a quarter of Scotlandrsquos population will be over 65 by that time The number aged 75 and over is projected to increase by 82 per cent3 The number of people with a long-term condition increases with age Over 62 per cent of 65ndash69 year olds report having a long-term condition increasing to 68 per cent of 75ndash79 year olds4 These population changes are placing more demands on unscheduled care (emergency and urgent care) In February 2013 the Scottish Government launched the Emergency Care Action Plan and announced that it would invest pound50 million over the next three years to improve unscheduled care
6 |In
-yea
r
Exhibit 1Overview of financial management in the NHS in ScotlandThe Scottish Government allocates most of the health budget to NHS boards and monitors how much they are spending throughout the year
Source Audit Scotland
Health and
Wellbeing PortfolioBudget of pound119 billion in
201213 of which
How budgets change each yearBoards receive additional allocations in-year includingbull brokerage (advance on
future years funding)bull return of prior year surplusbull programme-specific fundingbull new initiatives funding
Boards must not breach the following financial limitsbull Revenue Resource Limit
(revenue budget)
bull Capital Resource Limit (capital budget)
NHS boards pound109 billion
NHS board produces annual
accountsyear
-end
Performance managementPerformance against LDPs is monitored throughout the year using
bull Financial Performance ReturnsThese detailndash progress against targets
(including savings targets)ndash financial performance to datendash forecast final expenditure
bull Formal mid-year and annual reviews
NHS boards produce local delivery plans (LDPs)These include
bull financial and performance targets
bull a financial plan including savings
bull a performance plan
Signed off by Scottish Government
Fina
ncia
l
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
4 |
Summary
Key facts
pound109billion
Total amount spent by NHS boards in 201213
pound17million surplus
Overall performance against budget in 201213
pound270million
Total amount of savings achieved in 201213
pound268million
Total amount of savings that NHS boards will need to break even in 201314
pound56billion
Total spent on staff costs in 201213
133205WTE
Total number of NHS staff in 201213
Summary | 5
Background
1 The Scottish Government spent pound119 billion on health and wellbeing in 201213 35 per cent of Scotlandrsquos total public sector spending The total budget for the Scottish Governmentrsquos Health and Wellbeing Portfolio includes the budgets for health sport and equalities Most of the funding (pound109 billion) was allocated to the 14 territorial health boards that serve each area of Scotland and provide direct patient care and nine special health boards that provide national services1 In this report we refer to these collectively as NHS boards The Scottish Government manages the Health and Wellbeing Portfolio budget as a whole It allocates funding to the NHS boards and oversees their financial performance This includes monitoring NHS boardsrsquo financial performance on a monthly basis (Exhibit 1 page 6)
2 Over the last ten years the overall health budget has increased in cash terms that is not taking inflation into account It increased by 22 per cent in cash terms from 201112 and by 06 per cent in real terms taking inflation into account The overall health budget is forecast to decrease by 16 per cent in real terms over the next three years (Exhibit 2 page 7) However there are significant differences between the forecasts for the capital and revenue budgets The revenue budget is forecast to increase by 06 per cent over the next three years in real terms while the capital budget is forecast to decrease by 61 per cent in real terms over the same period
3 Territorial boards continue to receive small real-terms increases (06 per cent in 201314) but these are lower than in previous years (Exhibit 3 page 8) The Scottish Government has reduced some special boardsrsquo budgets and redirected these funds to territorial boards and special boards which provide direct patient care
4 In October 2012 we reported that all 23 NHS boards in Scotland broke even in 201112 with a small overall surplus of pound134 million (012 per cent of the total budget)2 However this involved money being moved between NHS boards during the year and this was not clearly reported in the NHS boardsrsquo annual accounts NHS boards must break even each year which means their income must equal their expenditure This requirement can lead to a short-term focus and we recommended that the NHS increases its focus on longer-term financial planning The report highlighted a number of risks to financial management in the future particularly that boards need to increase the amount of recurring savings that they make
5 This is a challenging time for NHS boards While budgets are getting tighter demand for healthcare is rising due to an ageing population more people with long-term conditions and the impact of factors such as increasing rates of obesity This presents significant challenges for NHS boards delivering services both now and in the longer term The number of people of pensionable age is estimated to increase by about 26 per cent by 2035 meaning that a quarter of Scotlandrsquos population will be over 65 by that time The number aged 75 and over is projected to increase by 82 per cent3 The number of people with a long-term condition increases with age Over 62 per cent of 65ndash69 year olds report having a long-term condition increasing to 68 per cent of 75ndash79 year olds4 These population changes are placing more demands on unscheduled care (emergency and urgent care) In February 2013 the Scottish Government launched the Emergency Care Action Plan and announced that it would invest pound50 million over the next three years to improve unscheduled care
6 |In
-yea
r
Exhibit 1Overview of financial management in the NHS in ScotlandThe Scottish Government allocates most of the health budget to NHS boards and monitors how much they are spending throughout the year
Source Audit Scotland
Health and
Wellbeing PortfolioBudget of pound119 billion in
201213 of which
How budgets change each yearBoards receive additional allocations in-year includingbull brokerage (advance on
future years funding)bull return of prior year surplusbull programme-specific fundingbull new initiatives funding
Boards must not breach the following financial limitsbull Revenue Resource Limit
(revenue budget)
bull Capital Resource Limit (capital budget)
NHS boards pound109 billion
NHS board produces annual
accountsyear
-end
Performance managementPerformance against LDPs is monitored throughout the year using
bull Financial Performance ReturnsThese detailndash progress against targets
(including savings targets)ndash financial performance to datendash forecast final expenditure
bull Formal mid-year and annual reviews
NHS boards produce local delivery plans (LDPs)These include
bull financial and performance targets
bull a financial plan including savings
bull a performance plan
Signed off by Scottish Government
Fina
ncia
l
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
Summary | 5
Background
1 The Scottish Government spent pound119 billion on health and wellbeing in 201213 35 per cent of Scotlandrsquos total public sector spending The total budget for the Scottish Governmentrsquos Health and Wellbeing Portfolio includes the budgets for health sport and equalities Most of the funding (pound109 billion) was allocated to the 14 territorial health boards that serve each area of Scotland and provide direct patient care and nine special health boards that provide national services1 In this report we refer to these collectively as NHS boards The Scottish Government manages the Health and Wellbeing Portfolio budget as a whole It allocates funding to the NHS boards and oversees their financial performance This includes monitoring NHS boardsrsquo financial performance on a monthly basis (Exhibit 1 page 6)
2 Over the last ten years the overall health budget has increased in cash terms that is not taking inflation into account It increased by 22 per cent in cash terms from 201112 and by 06 per cent in real terms taking inflation into account The overall health budget is forecast to decrease by 16 per cent in real terms over the next three years (Exhibit 2 page 7) However there are significant differences between the forecasts for the capital and revenue budgets The revenue budget is forecast to increase by 06 per cent over the next three years in real terms while the capital budget is forecast to decrease by 61 per cent in real terms over the same period
3 Territorial boards continue to receive small real-terms increases (06 per cent in 201314) but these are lower than in previous years (Exhibit 3 page 8) The Scottish Government has reduced some special boardsrsquo budgets and redirected these funds to territorial boards and special boards which provide direct patient care
4 In October 2012 we reported that all 23 NHS boards in Scotland broke even in 201112 with a small overall surplus of pound134 million (012 per cent of the total budget)2 However this involved money being moved between NHS boards during the year and this was not clearly reported in the NHS boardsrsquo annual accounts NHS boards must break even each year which means their income must equal their expenditure This requirement can lead to a short-term focus and we recommended that the NHS increases its focus on longer-term financial planning The report highlighted a number of risks to financial management in the future particularly that boards need to increase the amount of recurring savings that they make
5 This is a challenging time for NHS boards While budgets are getting tighter demand for healthcare is rising due to an ageing population more people with long-term conditions and the impact of factors such as increasing rates of obesity This presents significant challenges for NHS boards delivering services both now and in the longer term The number of people of pensionable age is estimated to increase by about 26 per cent by 2035 meaning that a quarter of Scotlandrsquos population will be over 65 by that time The number aged 75 and over is projected to increase by 82 per cent3 The number of people with a long-term condition increases with age Over 62 per cent of 65ndash69 year olds report having a long-term condition increasing to 68 per cent of 75ndash79 year olds4 These population changes are placing more demands on unscheduled care (emergency and urgent care) In February 2013 the Scottish Government launched the Emergency Care Action Plan and announced that it would invest pound50 million over the next three years to improve unscheduled care
6 |In
-yea
r
Exhibit 1Overview of financial management in the NHS in ScotlandThe Scottish Government allocates most of the health budget to NHS boards and monitors how much they are spending throughout the year
Source Audit Scotland
Health and
Wellbeing PortfolioBudget of pound119 billion in
201213 of which
How budgets change each yearBoards receive additional allocations in-year includingbull brokerage (advance on
future years funding)bull return of prior year surplusbull programme-specific fundingbull new initiatives funding
Boards must not breach the following financial limitsbull Revenue Resource Limit
(revenue budget)
bull Capital Resource Limit (capital budget)
NHS boards pound109 billion
NHS board produces annual
accountsyear
-end
Performance managementPerformance against LDPs is monitored throughout the year using
bull Financial Performance ReturnsThese detailndash progress against targets
(including savings targets)ndash financial performance to datendash forecast final expenditure
bull Formal mid-year and annual reviews
NHS boards produce local delivery plans (LDPs)These include
bull financial and performance targets
bull a financial plan including savings
bull a performance plan
Signed off by Scottish Government
Fina
ncia
l
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 |In
-yea
r
Exhibit 1Overview of financial management in the NHS in ScotlandThe Scottish Government allocates most of the health budget to NHS boards and monitors how much they are spending throughout the year
Source Audit Scotland
Health and
Wellbeing PortfolioBudget of pound119 billion in
201213 of which
How budgets change each yearBoards receive additional allocations in-year includingbull brokerage (advance on
future years funding)bull return of prior year surplusbull programme-specific fundingbull new initiatives funding
Boards must not breach the following financial limitsbull Revenue Resource Limit
(revenue budget)
bull Capital Resource Limit (capital budget)
NHS boards pound109 billion
NHS board produces annual
accountsyear
-end
Performance managementPerformance against LDPs is monitored throughout the year using
bull Financial Performance ReturnsThese detailndash progress against targets
(including savings targets)ndash financial performance to datendash forecast final expenditure
bull Formal mid-year and annual reviews
NHS boards produce local delivery plans (LDPs)These include
bull financial and performance targets
bull a financial plan including savings
bull a performance plan
Signed off by Scottish Government
Fina
ncia
l
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
Summary | 7
Exhibit 2Actual Scottish health budget 200203 to 201213 and forecast to 201516The health budget continues to increase in cash terms but it is decreasing in real terms
Health budget (cash terms) Health budget (real terms)
Forecast ndash health budget (cash terms)
Forecast ndash health budget(real terms)
Hea
lth b
udge
t (pound
billi
on)
0
2
4
6
8
10
12
14
2015
16
2014
15
2013
14
2012
13
2011
12
2010
11
2009
10
2008
09
2007
08
2006
07
2005
06
2004
05
2003
04
2002
03
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
6 The NHS in Scotland also experienced some significant change in 201213 NHS boards were working to achieve the new Treatment Time Guarantee (TTG) This was introduced by the Scottish Government on 1 October 2012 as part of the Patient Rights (Scotland) Act 2011 It gives patients a legal right to inpatient or day case treatment within 12 weeks of a decision being made to go ahead and it has been a key priority for the NHS during the year In May 2013 the Scottish Government published a Bill to implement its plans for health and social care integration from April 2015 The NHS and councils have started planning for this major change
7 The Scottish Government published its Route Map to the 2020 Vision for Health and Social Care in May 20135 This sets out what it expects the NHS to achieve in 201314 to further implement the Healthcare Quality Strategy and the 2020 Vision6 7 The Route Map reinforces that the main objectives for the NHS in Scotland are to deliver safe effective and person-centred care Since 2008 the NHS in Scotland has had a coordinated approach to improving patient safety through the Scottish Patient Safety Programme (SPSP) The programme aims to reduce mortality and adverse events which are defined as events that could have caused or did result in harm to people or groups of people8 Since 2008 the hospital standardised mortality ratio (HSMR) has fallen by 116 per cent across Scotland9 10
Exhibit 2
Audit Scotland
Exhibit 2 - Background data
Exhibit 2 - Background data
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
NHS financial performance 201213
Exhibit 2
Actual Scottish health budget 200203 to 201213 and forecast to 201516
pound billion
Health budget (cash terms)
Health budget (real terms)
200203
65
65
200304
72
71
200405
80
77
200506
88
83
200607
95
87
200708
102
91
200809
106
92
200910
111
93
201011
112
92
201112
113
91
201213
116
91
201314
118
91
(forecast)
201415
120
91
(forecast)
201516
121
90
(forecast)
Note 200203 used as reference year for GDP deflator
Source Scotlands draft budgets 200708 200809 200910 201011 201112 201213 and 201314 Scottish Government
8 |
Exhibit 3Changes to NHS board budgets 201011 to 201516Budgets for territorial and special boards have increased in cash terms but special boards budgets have decreased in real terms
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
About the audit
8 This report summarises and comments on the financial performance of the NHS in 201213 and on its future plans It is based on an analysis of
bull the audited annual accounts and auditorsrsquo reports on the 201213 audits of the 23 NHS boards
bull NHS boardsrsquo Local Delivery Plans (LDPs) which set out their detailed plans and anticipated budget for the next year and indicative plans for the next three to five years
bull Financial Performance Returns (FPRs) which detail boardsrsquo financial performance throughout the financial year
bull data published by Information Services Division (ISD) Scotland
Exhibit 3
Audit Scotland
Exhibit 3 - Background data
Exhibit 3 - Background data
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
NHS financial performance 201213
Exhibit 3
Changes to NHS board budgets 201011 to 201516
Cash Terms
Real Terms
change
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
201011-1112
201112-1213
201213-1314
201314-1415
201415-1516
Territorial
317
270
338
306
267
086
117
106
114
085
Special
108
143
125
016
052
-118
-007
-103
-171
-126
Note Percentage change in boards initial budget allocations (baseline)
Source Scotlands draft budgets 201112 201213 201314 and 201415 Scottish Government
Key messages | 9
Key messages
1 All NHS boards are required to meet annual financial targets This can mean that the key focus for NHS boards and the Scottish Government is on breaking even each year But they also need to increase their focus on longer-term financial planning to meet the significant challenges associated with rising demand and tightening budgets
2 The NHS managed its overall finances well in the short term and all NHS boards achieved their financial targets in 201213 Across all NHS boards there was a small overall surplus of pound169 million 016 per cent of the total revenue and capital budget
3 The NHS made savings of pound270 million in 201213 and achieved the Scottish Governmentrsquos target of saving a minimum of three per cent of the baseline budget NHS boards also set their own savings targets as part of their plans to break even Overall they made 99 per cent of these savings Twenty-two per cent of savings were one-off savings that boards will need to make again in the next year NHS boards did not achieve their forecast levels of recurring savings This will be a continuing challenge next year and in the future as it becomes more difficult to identify further opportunities to make significant savings
4 The NHS has made good progress in improving outcomes for patients such as reducing death rates from heart disease stroke and cancer Demand for healthcare is rising and there were signs of pressure within the system in 201213 Not all boards met their waiting times targets vacancy rates for consultants and nursing and midwifery staff increased and boards increased their use of agency and bank staff and their spending on private sector healthcare The introduction of the Treatment Time Guarantee in October 2012 has been a particular pressure and remains a key challenge for the future
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
10 |
Key recommendations
The NHS is facing significant challenges This means it needs to change how services are delivered and increase its focus on longer-term financial planning
Good practice includes NHS boards working with their partners to undertake
bull detailed analysis of the expenditure required each year to meet known needs and pressures
bull scenario planning to compare expected funding with projected expenditure under different models of service delivery and modelling the pressure on financial and other resources
bull detailed planning of how these pressures will be managed linked to the financial workforce asset and information technology strategies
To ensure their savings forecasts are realistic and achievable NHS boards need to
bull improve the accuracy of their short-term savings forecasts
bull review previous savings forecasts against actual performance to assess their reliability and to inform future projections and plans
To further improve the transparency of the annual accounts NHS boards should
bull report movements in the capital budget such as brokerage and significant delays and slippage leading to the return of capital funds to the Scottish Government This should build on the improvements NHS boards have made in the past year to disclosure about movements in planned revenue expenditure
To help improve NHS boardsrsquo financial planning the Scottish Government should
bull work with NHS boards to provide greater clarity on the timing value and nature of funding allocations earmarked for specific purposes during the year This would help to reduce financial uncertainty for the boards and any potential impact on providing services
bull consider moving away from the current arrangements of setting annual financial resource limits for each NHS board This would help NHS boards plan for the longer term and lead to fewer movements in their budgets during the year
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 11
Financial performance and sustainability
the NHS met its financial targets in 201213 but there are some signs of pressure
All boards met their financial targets in 201213 with a very small overall surplus
9 In 201213 the Health and Wellbeing Portfolio in the Scottish Government spent pound11830 million of which
bull the 14 territorial boards spent pound9638 million (82 per cent)
bull the nine special health boards spent pound1274 million (11 per cent) (Exhibit 4)
Exhibit 4Overall NHS performance against budget (capital and revenue) 201213The Health and Wellbeing Portfolio had a small overall surplus of pound27 million
201213 budget
(pound million)
201213 expenditure
(pound million)
Surplus(pound million)
Surplus( of budget)
Health and Wellbeing Portfolio
11857 11830 27 023
of which
Health 11757 11730 27 023
Territorial boards (14) 96529 96381 148 015
Special boards (9) 12766 12744 21 017
All boards 109294 109125 169 016
Note Table does not sum due to rounding
Source NHS boards annual accounts 201213 and Scottish Government management information
10 All NHS boards have to meet two financial targets each year they must break even against both their revenue and capital budgets at the end of the financial year (Appendices 1 2 and 3) Their annual revenue and capital budgets are formally known as the Revenue Resource Limit (RRL) and the Capital Resource Limit (CRL) All boards met these financial targets in 201213 for the fifth year running
11 NHS boards reported a small overall surplus of pound169 million This was made up of pound167 million revenue and pound02 million capital The final expenditure
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
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This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
12 |
called the outturn is very close to the annual budget with the surplus only 016 per cent of the overall budget (Exhibit 4 page 11) This highlights that the Scottish Government and the NHS boards very closely monitored and managed the forecast and actual financial position against budget throughout the year
12 The NHS in Scotland continues to manage its finances within its total budget During 201213 NHS boards delivered a higher than forecast underspend and the Scottish Government balanced this by using these funds in other areas of the NHS For example they were used to provide brokerage to other boards and for investment in insulin pumps and contributions to a new orphan drugs fund This funds medicines for people with rare conditions which are not available routinely
Three NHS boards retained larger surpluses as part of their longer-term financial planning 13 NHS boards have limited flexibility in their budgets and cannot build up any reserves from surpluses they have at the end of a financial year to spend on future plans Instead each board must agree with the Scottish Government any surpluses that it wishes to have available for future years During 201213 NHS Ayrshire and Arran NHS Dumfries and Galloway and NHS Lanarkshire agreed with the Scottish Government that they would make a managed revenue surplus at the end of 201213 They did this because their financial planning had shown that they will need these funds in future years This longer-term planning allows these boards to manage an element of their spending over more than one year giving them more flexibility in how they budget
14 NHS Lanarkshire delivered a year-end revenue surplus of pound45 million This plan was agreed with the Scottish Government in November 2012 The board will carry forward the surplus to help fund refurbishment works at Monklands Hospital and implement the adult mental health strategy over the next two years NHS Dumfries and Galloway delivered a year-end revenue surplus of pound4 million agreed with the Scottish Government in August 2012 The Scottish Government will return the surplus to the board between 2014 and 2017 The board will use this money to help fund the double-running costs it will have as it commissions the new Dumfries and Galloway Acute Hospital and keeps the existing hospital open until the new facility is available
15 NHS Ayrshire and Arran also reported a revenue surplus of pound34 million This was pound14 million above the pound2 million forecast agreed with the Scottish Government in the boardrsquos LDP The board agreed the additional surplus with the Scottish Government in January 2013 The board has been using surpluses built up over a number of years and forecasts that it will reduce this surplus to pound2 million in 201314 and break even from 201415 onwards The board has earmarked the surplus for specific projects in 201314 including pound14 million to pay for initiatives to manage waiting times
16 The surpluses reported by these three boards accounted for 71 per cent of the total surplus against the total NHS revenue budget The remaining 20 boards made an overall surplus of just 005 per cent of their combined revenue budget The Scottish Government can permit some flexibility in NHS boards managing their budgets across more than one year but needs to manage expenditure within the budget of the Health and Wellbeing Portfolio as a whole This may mean the Scottish Government is not able to agree any further flexibility if it is requested by a large number of boards
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
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Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 13
Four boards received brokerage in 201213 to help them break even
17 The Scottish Government can agree to provide extra funding to an NHS board in a financial year The board then repays this money at a later date This is referred to as brokerage Brokerage can introduce an element of flexibility into budgeting and spending plans helping boards to manage changes to planned expenditure or providing extra money at a time of pressure The Scottish Government makes the funding available only when a board provides assurance that it can repay the funds In agreeing to receive brokerage boards take on the risk that they may need to prioritise future repayments of brokerage over investment in services The Scottish Government may also put in place other non-financial support packages These packages are known as tailored support and help a board deal with areas of difficulty This can be help to return to financial balance or with other areas of their performance This may mean staff from the Scottish Government or another NHS board working with staff to help them identify potential savings in specific areas of difficulty
18 Four boards received brokerage from the Scottish Government to help them break even in 201213 (Exhibit 5 page 14) and (Case study 1 page 15) This was all for specific purposes Unlike the previous year no board required tailored support from the Scottish Government to help it achieve financial balance
19 Both NHS Fife and NHS Tayside needed brokerage to help them break even in 201213 because capital sales did not happen as planned in the year This meant their actual income was less than forecast by very small amounts (02 per cent and 03 per cent of their respective RRLs) This highlights the limited flexibility in their financial plans and the impact of the requirement to break even each year The requirement to meet the annual financial target meant that the boards needed to make formal brokerage agreements with the Scottish Government instead of managing the impact of the timing difference at board level over a longer period The commitment to repay the brokerage within agreed timescales is an additional financial risk that the boards need to manage
20 There is a risk that the planned capital sales at NHS Fife and NHS Tayside do not occur in 201314 or that the income they receive is lower than planned This would mean that the boards could not afford to repay the brokerage from the sales and would need to defer other expenditure or make additional savings to meet the repayment NHS Fife continues to assess market conditions to monitor this risk NHS Tayside has agreed increased flexibility in the timing of the repayment with the Scottish Government to minimise the impact of this risk
21 NHS Orkneys auditors noted that the boards financial position has improved due to concentrated efforts to make targeted savings and to change the way it delivers services to make them more efficient Therefore the board did not require brokerage in 201213 having received pound438 million over the previous three years However there are still risks to the financial position The board will repay the brokerage from 201415 through further savings and receipts from property sales and the auditors highlighted that the savings targets are very challenging They highlighted a risk that if the board does not achieve its planned savings it may need to curtail investment in services to repay brokerage
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
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AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
14 |
Boards have improved disclosure about revenue funding changes22 Our 201112 report recommended that boardsrsquo annual accounts should clearly report brokerage or plans to use surplus funds The Scottish Government subsequently issued guidance to boards reiterating that information about financial flexibility agreed with the Scottish Government must be transparent that is clear understandable and easy to obtain
23 The four boards that received brokerage and the three boards that reported larger than forecast surpluses worked with their auditors to improve the proposed disclosure of these arrangements All boards were open to making improvements to disclosure and there are clearer statements in the audited annual accounts
Exhibit 5Brokerage provided by the Scottish Government in 201213Four boards received brokerage in 201213
Board Amount received in 201213
Why brokerage was provided Repayment schedule
NHS 24 pound166 million NHS 24 received brokerage to put changes to its services in place including a new IT system Brokerage of pound03 million was provided in 201112 with a further pound17 million to be provided in 201314
Total brokerage of pound186 million to be repaid over three years starting 201415
NHS Lothian pound8 million The board received pound10 million brokerage to help improve its waiting times The board spent pound8 million of this and returned pound2 million at the end of 201213
Total amount of pound8 million repayable over two years to 201415
NHS Tayside pound225 million The board received brokerage to deliver its financial plan after a planned asset sale was delayed until 201314
The board will repay pound025 million in 201314 with the following pound2 million to be repaid by 201516 The exact timing of the repayment is flexible depending on the timing of the sale and required planning consent
NHS Fife pound14 million In 201213 NHS Fife was due to use profits from the sale of St Andrews Memorial Hospital to repay the remaining pound075 million from the pound111 million brokerage that it received from the Scottish Government in 201112 However due to the delay in the sale of the hospital the board agreed with the Scottish Government to defer the brokerage repayment In 201213 NHS Fife received an additional pound14 million of brokerage to support expenditure and this is also scheduled to be repaid from the profit from the sale of the hospital NHS Fife anticipates repaying the combined brokerage amount of pound215m from the sale of the hospital in 201314
Total combined brokerage of pound215 million to be repaid in 201314 The exact timing of the repayment is flexible depending on the timing of the sale
Source Audit Scotland based on board annual audit reports and information from the Scottish Government
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
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Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 15
Case study 1Use of brokerage to support NHS 24s Future Programme
NHS 24s strategic plan includes significantly changing the way it delivers services through its Future Programme This involves implementing new ways of working using IT and developing a shared approach to patient assessment with the Scottish Ambulance Service To avoid paying pound46 million in financial charges over the life of the contract with the main supplier NHS 24 agreed with the Scottish Government that upfront repayable funding would be provided to enable the board to fund this programme The board agreed to repay this from savings generated by the new programme By 201213 the board had received pound169 million in brokerage over 85 per cent of the total amount forecast to be received
This is a good example of planning by the board and the Scottish Government to deliver a major investment in services for patients However the auditors have highlighted a number of significant risks to the board in achieving the planned savings and managing the planned repayment of the brokerage between 2014 and 2017 The auditors concluded that achieving future financial targets will be extremely demanding
Source NHS 24 Annual Audit Report 201213 and information from the Scottish Government
NHS boardsrsquo budgets changed over the year
24 The Scottish Government provides NHS boards with an initial baseline budget at the start of the year and additional funding allocations throughout the year On average the boards received 85 per cent of their total budget in April 2012 with the remaining 15 per cent being made available throughout the year However the final budgets were not agreed until after the end of the financial year (31 March 2013) and as late as June 2013 in some cases largely to process technical accounting adjustments NHS boardsrsquo financial targets are to break even against these final capital and revenue budgets and this requires careful management Auditors for NHS Forth Valley and NHS Greater Glasgow and Clyde recommended that the boards need to discuss the timing of allocations for project-specific or partnership funding further with the Scottish Government This is to enable better phasing of spending and allocations over the lifetime of projects
25 In their LDPs seven boards note the risks around their actual allocations not being as much as they assume or require to deliver services11 This is particularly for earmarked allocations This is funding that the Scottish Government allocates to NHS boards for specific purposes such as for drug and alcohol treatment and support NHS National Services Scotland noted in its LDP that if funding arrangements were not finalised by the end of the first quarter of the financial year in June it would need to take action to minimise the financial risk to the board This could potentially mean reducing the services it delivers
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
16 |
There were significant movements across the capital budget during 201213
26 The overall capital budget for 201213 reduced by 20 per cent from 201112 to pound6055 million NHS boards reported an overall surplus of pound02 million 004 per cent of the budget (Appendix 3 page 43) The decrease in the overall capital budget is largely due to reduced funding for the technical accounting implications in the first year of new Public Private Partnerships (PPPs) In accordance with the boardsrsquo accounting and budgeting framework this funding is provided in full by the Scottish Parliament and so does not impact on the amount of capital available for boards to spend In 201112 two large PPP projects came into use during the year at NHS Fife (Victoria Hospital) and NHS Forth Valley (Forth Valley Royal Hospital) The boards received additional funding from the Scottish Parliament for the accounting implications of these projects Murray Royal Hospital in NHS Tayside was the only significant new PPP project in Scotland in 201213 This means the overall capital funding for the accounting treatment of new PPP projects from the Scottish Parliament fell from pound278 million in 201112 to pound77 million in 201213
27 When the funding for new PPP assets is removed the capital budget available to fund investment at NHS boards increased by ten per cent from pound481 million in 201112 to pound528 million in 201213 (Exhibit 6) The 201213 budget included additional capital funding made available by the Scottish Government to NHS boards through a revenue-to-capital transfer of pound95 million (pound320 million over three years) and pound15 million for shovel-ready projects (backlog maintenance projects that were ready to start immediately) These projects were brought forward from 201314 to 201213 to boost economic activity Barnett consequentials led to an additional pound10 million in the 2012 autumn budget review These are proportionate changes in funding that the Departments of the UK Government provide to the Scottish Government and other devolved administrations when the UK Government announces changes in funding
28 NHS boardsrsquo LDPs for 201213 planned for capital expenditure of pound6035 million This figure excluded Scottish Parliament funding for new PPPs and included some of the Scottish Governmentrsquos planned increase
Exhibit 6NHS capital budget 201112 and 201213The overall capital budget decreased from 201112 but the budget available for investment in capital programmes increased
201112pound million
201213pound million change
Total capital budget 7583 6055 -2015
Split into
Capital provided for investment in board capital programmes 4806 5281 987
Capital funded by the Scottish Parliament for accounting treatment for new PPP projects
2777 775 -7209
Source Boards financial performance returns March 2013 and annual accounts 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 17
However the final capital expenditure of pound528 million was seven per cent lower than originally planned in the LDPs There were multiple movements in boardsrsquo capital budgets during the year The movements were both increases and decreases with a number of boards having changes of over 60 per cent These movements resulted from additional allocations for projects from the Scottish Government or boards returning unspent funding due to project delays or slippage (Exhibit 7 page 18)
29 Despite the increase in available capital funding in 201213 NHS boards returned about pound36 million of capital funding to the Scottish Government due to project delays and slippage NHS Grampian and NHS Highland returned capital funds to the Scottish Government in 201112 received these back in 201213 and then returned them again later in 201213 Both boards have spending commitments in 201314 for these funds
Transparency of movements in the capital budget needs to improve30 Like the revenue budget the Scottish Government very carefully manages the capital budget during the year in discussion with individual boards Any delays or changes to proposed plans or timing of expenditure mean that a boardrsquos budget is adjusted The Scottish Government moves funding between boardsrsquo budgets according to what they need While these movements may be necessary to try to maximise how boards use funds they emphasise the focus on annual break even driven by the current framework of annual financial targets
31 While agreed movements in the revenue budget were more transparent in 201213 (paragraph 23 page 14) boards now need to improve the way they report on any movements in capital funding so they are also clear Boardsrsquo annual accounts have relatively little detail about the capital budget and explanations of significant changes from the original plan
Changes in budgets and movements in funds during the year make it difficult to monitor underlying financial performance
32 Revenue and capital budgets can change significantly during the year Auditors have reported no weaknesses in short-term financial management However changes to the budgets during the year mean that it is difficult to assess NHS boardsrsquo actual performance against their budget They also mean that it is difficult to identify any underlying difficulties with boardsrsquo financial sustainability ie their ability to fund all required services within budget over the longer term
33 There were a number of changes to budgets during 201213
bull NHS boards that were at risk of breaching their financial target by spending more than their budget received brokerage from the Scottish Government (Exhibit 5 page 14)
bull The Scottish Government provided additional funding allocations to NHS boards for particular reasons during the year for example to help meet waiting times targets in those boards where performance was below target
bull The Scottish Government and NHS boards agreed that unspent capital funds would be returned to the Scottish Government during the year and then allocated to another NHS board (paragraph 30)
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
18 |
Exhibit 7Significant movements in the capital budget across boards and changes to individual board budgets from LDP forecast to final capital budgetCapital budgets decreased from original plans at more than half of the territorial boards
-80
-60
-40
-20
0
20
40
60
80
100
Cha
nge
in c
apit
al b
udge
t (
)
NHS board
The S
tate H
ospit
al
Scotti
sh A
mbu
lance
Ser
vice
NHS Nati
onal
Servic
es S
cotla
nd
Health
care
Impr
ovem
ent S
cotla
nd
NHS Hea
lth S
cotla
nd
NHS Educ
ation
for S
cotla
nd
NHS 24
Nation
al W
aiting
Tim
es C
entre
Wes
tern I
sles
Tays
ide
Shetla
nd
Orkney
Loth
ian
Lana
rkshir
e
Highlan
d
Greate
r Glas
gow an
d Clyd
e
Gram
pian
Forth
Valle
yFif
e
Dumfri
es an
d Gall
oway
Borde
rs
Ayrsh
ire an
d Arra
n
-20
67 69
10
-2
8
-12
40
-23-11
-42
-8 -5 -1
3
100
67
-11
52
-65
21
-1
pound6m
Project funding returned to the
Scottish Government
Revenue to capital transfer
pound7m
Brokerage received from
the ScottishGovernment
pound7m
Additionalgeneral
allocations
pound6m
Additional allocations for specific projects
pound43m
Re-classificationof expenditure
on backlog maintenance from capital to revenue
pound16m
Funding returned to Scottish
Government to hold for future years
pound17mReturn of general
funding to theScottish Government
pound2m
Slippage on projects
pound11m
Movements in capital budget across all boards
Movements in capital budget in individual boards
Notes 1 Scottish Government funding was available to NHSScotland to make hospitals more energy efficient NHS National
Services Scotland manages boards funding applications centrally Its capital budget was reduced by pound5 million at the end of the year due to the accounting treatment for this funding
2 The Mental Welfare Commission did not have a capital budget in 201213
Source LDPs 201213 and annual accounts 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 19
34 The requirement that all boards break even each year can contribute to these movements in allocations and changes in budgets This is because the Scottish Government and boards actively monitor and manage the budgets to ensure they all break even Annual financial targets can also be inflexible NHS boardsrsquo spending on projects rarely fits in one financial year only and so boards need to phase expenditure on a project over a number of years Significant service redesign requires upfront investment which will be recouped by future savings While some NHS boards have made agreements with the Scottish Government to save now to pay for future changes in services the current system may not have enough flexibility to enable this to happen on a larger scale NHS boards and the Scottish Government are currently tied to achieving a break-even position each year and movements in funds support this objective rather than longer-term strategic objectives
35 The Wales Audit Office has commented on the lack of flexibility in Welsh health boards having to break even each year The Welsh Governmentrsquos Department of Health intends to move from a requirement for health boards to break even every year to a more flexible requirement to break even over a three-year period12
36 The Scottish Government could consider a similar approach for the NHS in Scotland as it thinks about ways to increase the flexibility available for boards to manage their expenditure over a number of years The NHS boards as individual public bodies would continue to be accountable for the money they spend but could shift the focus from aiming to break even every year to financial sustainability over the longer term The Scottish Government and NHS boards would need to work together to manage any risks arising from this approach This would include improving forecasting and planning so that the whole Health and Wellbeing Portfolio can continue to meet overall Scottish Government budget requirements
The NHS boards met 99 per cent of their savings targets but did not meet the forecast level of recurring savings
37 In his statement on the draft budget 201213 the Cabinet Secretary for Finance and Sustainable Growth stated that NHS boards would need to make efficiency and productivity savings of at least three per cent At the start of 201213 NHS boards forecast that they needed to make total savings of pound2717 million to break even Across all boards this was 31 per cent of the baseline revenue budget that they were allocated by the Scottish Government at the start of the year For individual boards their savings target to break even ranged from 17 per cent of baseline at NHS Grampian to 71 per cent at NHS Shetland
38 The NHS as a whole achieved savings of three per cent of baseline as required by the Cabinet Secretary and 99 per cent of its overall savings target (pound2698 million against the target of pound2717 million) (Exhibit 8 page 20) While both NHS Lothian and NHS Orkney achieved savings of over three per cent of their baseline budget they missed their own savings targets by ten per cent and five per cent respectively NHS Lothian achieved savings of pound338 million against a target of pound375 million It was able to use underspends from across the organisation to break even Some boards made more savings than they planned These savings helped to make up the overall difference between the target and the actual savings across Scotland
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
20 |
Exhibit 8Savings achieved in 201213 and savings required in 201314Boards made significant savings in 201213 but need to make the same again in 201314
All boards total 2698 99 307 2678 295 Note Table does not sum due to rounding
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
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Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 21
Exhibit 9Recurring savings 201112 performance against forecast 201213 and forecast 201314Ten boards did not meet their forecast level of recurring savings in 201213
NHS board
Percentage of savings that are recurring
201112 201213 201314
Actual savings ()
Forecast savings ()
Actual savings ()
Forecast savings ()
Ayrshire and Arran 97 100 95 67
Borders 57 86 65 50
Dumfries and Galloway 89 100 96 100
Fife 56 58 53 89
Forth Valley 65 94 78 100
Grampian 98 65 87 67
Greater Glasgow and Clyde 100 100 100 100
Highland 42 75 45 67
Lanarkshire 94 91 91 57
Lothian 66 94 70 100
Orkney 85 80 69 100
Shetland 100 97 80 86
Tayside 57 59 44 52
Western Isles 82 69 71 83
Total territorial boards 77 86 76 81
National Waiting Times Centre 97 92 87 96
NHS 24 67 100 100 100
NHS Education for Scotland 81 86 86 67
NHS Health Scotland 100 100 100 100
Healthcare Improvement Scotland 98 92 83 100
NHS National Services Scotland 100 98 100 100
Scottish Ambulance Service 83 97 96 99
The State Hospital 100 78 73 51
Total special boards 97 94 93 94
All boards total 79 87 78 82
Did not meet forecast Met forecast Board made actual forecast recurring savings but made additional non-recurring savings above their overall target This affects the percentage recurring savings
Source Board LDPs 201213 and 201314 FPRs March 2012 and March 2013
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
22 |
39 We highlighted the high percentage of non-recurring savings as a risk in our 201112 report and this risk remains These are savings that are only made for one year rather than savings that the board will continue to make every year Boards continued to rely on non-recurring savings in 201213 indicating that some are finding it hard to make more savings on an ongoing basis Almost half (11 boards) had a lower percentage of recurring savings than they had in 201112 (Exhibit 9 page 21) Across all boards 78 per cent of savings were recurring This was around the same level as 201112 (79 per cent) but nine per cent lower than forecast
40 Eight territorial boards forecast an increase in the proportion of total savings delivered on a recurring basis in 201213 but only NHS Dumfries and Galloway achieved its full forecast13 14 Three of these boards NHS Ayrshire and Arran NHS Fife and NHS Tayside achieved a lower percentage of total savings on a recurring basis than in the year before
41 The percentage of savings made on a recurring basis was lowest in NHS Tayside NHS Highland NHS Fife and NHS Borders These four boards also had the lowest percentage of recurring savings in 201112 NHS Bordersrsquo level of recurring savings increased slightly but NHS Tayside decreased from 57 per cent to 44 per cent Continuing to rely on a significant proportion of non-recurring savings is a high-risk strategy for boards As savings get more difficult to find the risk of these NHS boards not being able to identify such high levels of non-recurring savings year after year will continue to increase In their audit reports auditors highlighted that relying on non-recurring savings is not sustainable in the long term It is also more difficult for a board to manage the impact of non-recurring savings in a planned way particularly for those non-recurring savings that were higher than planned in order to meet the overall savings target For example the board may not have included these savings in its workforce or clinical service plans and therefore the savings may not fit with the direction of these plans
Boards will not be able to increase their savings from prescribing to the same extent in future years42 The NHS spent over pound146 billion on prescribing in general practice and hospitals in 201213 the second largest area of spending after staffing15 16 NHS boards made most savings in this area in 201213 classifying pound662 million savings to the category lsquodrugs and prescribingrsquo17 This is pound15 million more than NHS boards predicted in their 201213 LDPs (Exhibit 10 page 23) Drugs and prescribing contributed most to recurring savings (30 per cent of total recurring savings) Clinical productivity and workforce were the largest areas of non-recurring savings contributing 26 per cent and 25 per cent respectively which was higher than the forecasts As more of the savings than planned in these categories were non-recurring it suggests that they resulted from short-term initiatives rather than significant changes to ways of working
43 The NHS has been successful in using a range of measures to control spending on prescribing in general practice in recent years18 In addition a number of commonly used drugs came off patent in 201213 contributing to higher than anticipated cost savings However NHS boards will not be able to rely on making new recurring savings from the expiry of drugs patents to the same extent in future years The Scottish Government is continuing to work with NHS boards to improve the quality and cost effectiveness of prescribing
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
Financial performance and sustainability | 23
Exhibit 10Comparison of savings planned and achieved 201213Boards made less recurring savings than planned in all areas apart from drugs and prescribing procurement and support services
Actual recurring savings
Actual non-recurring savings
Sav
ings
(pound m
illio
n)
0
10
20
30
40
50
60
70
Other
loca
l
savin
g sch
emes
Estat
es an
d
facilit
ies
Suppo
rt
serv
ices
Proc
urem
ent
Drugs
and
pres
cribin
g
Wor
kforce
Clinica
l
prod
uctiv
ity
Forecast recurring savings
Forecast non-recurring savings
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
44 While drugs coming off patent has contributed to cost savings some NHS boards identified increased prescribing as a cost pressure in their LDPs General practice accounts for most spend on prescribing but spending on hospital prescribing is increasing more High-cost specialist drugs are a particular cost pressure (Case study 2 page 24)
The target of pound268 million savings for 201314 will be challenging for boards to achieve sustainably
45 In their 201314 LDPs NHS boards forecast that they will need savings of pound268 million to break even This is pound69 million (35 per cent) more than they had planned for 201314 in the 201213 LDPs As NHS boards made less recurring savings than planned in 201213 this means that they need to make these additional non-recurring savings again in 201314 This accounts for approximately pound20 million of the increase
46 The pound268 million in savings is three per cent of the NHS boardsrsquo baseline revenue budgets the same level as 201213 (Exhibit 8 page 20) For territorial boards this ranges from 24 per cent of the baseline revenue budget at NHS Lothian to 62 per cent at NHS Shetland Overall boards reported that nine per cent of these savings are categorised as high risk in terms of how likely the boards are to achieve them This is less than the previous year when 20 per cent of the target was classified as high risk Four boards have classified over a quarter of their savings as high risk19 Auditors for all boards reported that the savings targets will be a significant challenge for boards to achieve and sustain and will make it difficult
Exhibit 10
Audit Scotland
Exhibit 10 - Background data
Exhibit 10- Background data
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
NHS financial performance 201213
Exhibit 10
Comparison of savings planned and achieved 201213
Forecast savings 201213
Actual savings 201213
pound000s
Non-recurring savings
Recurring savings
Non-recurring savings
Recurring savings
Other local saving schemes
2053
13521
4445
4659
Estates and facilities
9134
14191
8433
11296
Support services
7831
20871
8346
29843
Procurement
1898
24083
5078
25288
Drugs and prescribing
800
50369
2400
63822
Workforce
4117
42031
14473
36748
Clinical productivity
8779
59410
15521
39488
Note There was also pound1114 million recurring savings and pound148 million non-recurring savings
forecast as unidentified which are included as actual savings in the categories above
Source Audit Scotland analysis of FPRs and boards LDPs 201213
24 |
to maintain or improve on the performance targets set by the Scottish Government The savings targets will require boards to prioritise further how they use the funding available to them At the end of July 2013 NHS boards had made pound83 million in savings for 201314 This is approximately pound57 million ahead of their in-year target20
Case study 2Spending on high-cost specialist hospital medicines
NHS boards spent over pound115 million on the top ten high-cost low-volume (HCLV) drugs in hospitals in 201213 a third of total spending on all drugs in hospitals1 These are expensive specialist drugs that are used for a comparatively small number of patients These can be a pressure on NHS boards as spending increases at a higher rate than other costs and it can be less predictable The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs
Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years
Change in total spending 201011 to 2011122
Change in total spending 201112 to 2012133
Top ten HCLV drugs ndash cash terms pound122 million (15) pound135 million (13)
Top ten HCLV drugs ndash real terms pound104 million (12) pound12 million (12)
All hospital drugs ndash cash terms pound134 million (5) pound282 million (9)
All hospital drugs ndash real terms pound7 million (24) pound23 million (7)
Drugs in general practice ndash cash terms pound12 million (1) pound60 million (-6)
Drugs in general practice ndash real terms pound11 million (-1) pound74 million (-7)
Notes 1 Data are not included for NHS Tayside as they are currently being processed by ISD Scotland
The drugs included for this analysis are those on the NHS England Payment by Results exclusions list (given their specialist and high cost nature) which the Scottish Medicines Consortium has accepted for use in Scotland
2 Spending on HCLV drugs and all hospital drugs excludes NHS Highland and NHS Tayside3 Spending on HCLV drugs and all hospital drugs excludes NHS Tayside
Source Audit Scotland based on analysis of ISD Scotland data
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
Financial performance and sustainability | 25
47 Boards have forecast that they will increase the percentage of recurring savings in 201314 to 82 per cent (Exhibit 9 page 21) The majority of boards did not achieve their forecast increase in recurring savings in 201213 (paragraph 40 page 22) making it a significant challenge to meet this forecast in 201314
NHS boards do not have enough focus on longer-term financial planning
48 While breaking even in the short term is important boards also need to focus on further developing strategic financial plans which cover the longer term This would require more detailed focus on planning for significant developments and redesign to ensure these are affordable In their LDPs boards provide financial projections for between three and five years depending on the Scottish Governmentrsquos requirements21 These projections set out expected funding projected expenditure and the forecast savings required each year to close the gap between income and expenditure Boards provide a breakdown of the forecast categories of savings
49 However detailed financial planning is mainly limited to year one of the LDP For 201314 NHS boards have forecast which category 97 per cent of their savings will be in leaving three per cent of savings unidentified For the following year 201415 the amount unidentified increases to 66 per cent and it goes up to 73 per cent for 201516 (Exhibit 11) This means that for just one and two years ahead boards have not identified how or where they will achieve over two-thirds of the savings required For five boards all savings are unidentified after 20131422 This indicates a lack of planning about how boards are
bull making their finances sustainable over the long term
bull prioritising and redesigning services and associated expenditure so they can plan and achieve savings
Exhibit 11Percentage of NHS boards savings that are unidentified 201314 to 201718Boards LDPs do not always identify where future savings will come from
Perc
enta
ge o
f uni
dent
ified
sav
ings
0
10
20
30
40
50
60
70
80
90
100
201718201617201516201415201314
Note Savings up to 201516 are based on all boards LDPs Savings for the final two years are based on the 13 boards that submitted LDPs for five years
Source NHS board LDPs 201314
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
26 |
50 In paragraph 40 (page 22) we noted that most NHS boards did not meet their forecasts for reducing reliance on non-recurring savings in 201213 We also highlighted that boards have had to increase the savings they require to break even in 201314 by approximately pound70 million compared to what they had projected (paragraph 45 page 23) This highlights a level of optimism in the forecasts
51 The Scottish Governmentrsquos central Quality and Efficiency Support Team works closely with NHS boards to help them to identify and achieve efficiency savings and deliver improvements in services This includes work to improve efficiency and productivity by reducing waste duplication and unnecessary variation across services and NHS boards
52 Our 2011 report Scotlandrsquos public finances addressing the challenges highlighted that public bodies need to focus on achieving long-term financial sustainability To meet the challenge of reducing budgets and increasing cost pressures they need to think more radically about how to reduce their costs in the longer term Rising demand from an ageing population with complex health needs significant reform of health and social care services through integration and the need to generate considerable recurring savings mean that NHS boards need to change how they deliver services They have started planning for this but they have not carried out detailed financial planning to make sure that their strategies are affordable
53 Several auditors have highlighted that boards have good processes in place for identifying and delivering savings each year and prioritising funding annually The auditors have described boardsrsquo short- and medium-term planning as generally sound However a number have also commented that boardsrsquo strategies are not yet fully underpinned by detailed long-term financial planning
bull Auditors at NHS Highland reported that while the LDP takes into account cost reductions and the other efficiency savings required it does not detail how the board will achieve the plans They noted that the five-year financial forecasts are very high level
bull NHS Lothianrsquos annual audit report highlights that the board will be working to align its financial asset management and workforce strategies to its new strategic clinical framework which was approved in February 2013
bull Auditors at NHS Forth Valley reported that the board is developing the next stage of its healthcare strategy This will include its ability to deliver service change and cost savings to meet future demographic and technology changes
bull Auditors at NHS Lanarkshire reported that the 2012-17 finance plan could more clearly demonstrate how the board has allocated funding in line with its corporate objectives
bull Auditors at NHS Education for Scotland and the Scottish Ambulance Service recommended that the boards consider planning over a longer period and incorporating risk-based contingency planning based on the range of different potential funding scenarios
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
Financial performance and sustainability | 27
54 There is some evidence that NHS boards and the Scottish Government carry out some longer-term financial planning An example is NHS Dumfries and Galloway planning for the impact of the new Dumfries and Galloway Acute Hospital At the start of 201213 the board identified a number of one-off savings that amounted to pound4 million This included benefits from GP prescribing (pound085 million) and budgeted costs being less than forecast (pound19 million) The board agreed with the Scottish Government that this money would be shown as an underspend by the board at the year-end The Scottish Government retained the surplus and will return it to the board over 2014 to 2017 to help fund double-running costs as the new hospital comes into use While this is good longer-term financial planning the boardrsquos original financial forecast did not identify these one-off savings The auditors highlighted that the board should scrutinise the assumptions underpinning the LDP more closely
55 The funding cycle for the NHS boards means longer-term funding levels are uncertain However this should not prevent boards from developing more detailed long-term financial plans Boards are starting to progress the detailed financial planning they need to help them develop long-term strategies to meet future needs In line with good practice this would include
bull forecasting and analysing levels of demand and changes arising from service redesign
bull modelling how much they need to increase spending by and in what ways spending will change
56 Boards could use scenario planning to forecast projected levels of income and identify the range of savings that may be required Boards should analyse the savings to be achieved through service redesign and plan in detail for how they will make up the remainder of savings This type of analysis would underpin the LDPs as the overall planning document and link to workforce asset and information technology strategies As some specialist services are configured on a regional basis and there are significant patient flows between board areas boards should work together and in their Regional Planning Groups to collaborate on future service configurations and identify where savings can be made
Increasing cost pressures will bring more challenges for the boards
57 Auditors reported that the future financial position is becoming more challenging NHS boards face limited funding increases rising cost pressures and challenging savings and performance targets Demand for services is also growing with more people living longer and more people having health conditions that need managed on a long-term basis
Five NHS boards are still receiving less than their target funding four years after a new funding formula was introduced58 Five NHS boards continue to receive funding below their National Resource Allocation Committee (NRAC) target allocations (Fife Forth Valley Grampian Lanarkshire and Lothian) The Scottish Government first used the NRAC formula to allocate NHS board funding in 200910 so the formula has now been in place for four years These NHS boards have been under-funded by a total of pound517 million over that period Every year their allocations move towards parity with the level they should receive under the formula but the Scottish
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
28 |
Government has no specific timescales for achieving NRAC parity It has said that it does not want to destabilise other boards by reducing and reallocating their funding The Scottish Government allocated a further pound32 million in total to the boards below their target allocation in 201213 and an additional pound42 million in 201314 However the lack of clear plans and an agreed timescale to move towards parity adds uncertainty to NHS boardsrsquo planning
59 In 201213 two of the boards that received brokerage were below their NRAC target allocation NHS Lothian received pound54 million less than expected under the formula and NHS Fife pound12 million Our 2012 report commented that there did not appear to be any strong relationship between financial performance and the distance from target NRAC allocation This is still the case While under-funding may have been a factor in NHS Lothianrsquos and NHS Fifersquos financial position other boards that are below their NRAC funding target have managed the position This includes NHS Grampian and NHS Lanarkshire which delivered a managed surplus
Backlog maintenance reduced by six per cent to pound948 million but continues to require attention60 NHS boards have a backlog of maintenance that they need to carry out to ensure their buildings are fit for purpose The spending needed to address the backlog reduced from pound1 billion in 2011 to pound948 million in 201223 It reduced in nine of the territorial boards but increased in the other five24 25 The Scottish Government has estimated that pound175 million of the backlog is in buildings that the NHS plans to dispose of in the next five years26
61 The Scottish Government has classified pound159 million of the maintenance backlog as high risk which is defined as work that must be addressed as an urgent priority This is down from pound232 million in 2011 Over 90 per cent of NHS Orkneyrsquos backlog is classified as high risk but the boardrsquos plans to replace Balfour Hospital should address much of this NHS Borders NHS Lanarkshire and NHS Lothian have between 30 and 40 per cent of their backlogs classified as high risk Across Scotland approximately 88 per cent of the backlog is in clinical areas where patients receive care The Scottish Government has stated that it expects that NHS boards will prioritise high- and significant-risk backlog maintenance On that basis it has projected that the high-risk backlog will be cleared within two years and the significant backlog within four years (Exhibit 12 page 29) and Case study 3 (page 29)
62 The Scottish Government made additional capital funding available to help boards reduce their backlog maintenance (paragraph 27 page 16) This helped boards to target spending on this area Backlog maintenance is funded from a mix of capital and revenue funding During the year as boards developed detailed plans for work on backlog maintenance pound16 million of the expenditure was re-classified as revenue from capital This was due to the nature of the works and to comply with accounting requirements
The financial impact of pension revaluation and equal pay claims is still unknown63 Our 2012 report highlighted that the NHS in Scotland had received about 10000 equal pay claims but it was not possible to estimate the impact of the claims This position continued in 201213 and boards disclosed an unquantified contingent liability in their accounts This is to identify that they face a potential
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
Financial performance and sustainability | 29
Exhibit 12Total and forecast backlog maintenance across Scotland 2012 to 2017Backlog maintenance is reducing and the high- and significant-risk backlog is forecast to be cleared by 2016
High risk Significant risk Low and moderate risk
Bac
klog
mai
nten
ance
req
uire
d (pound
mill
ion)
0
100
200
300
400
500
600
700
800
900
1000
201720162015201420132012
Source Audit Scotland analysis of information provided by the Scottish Government
Case study 3Reducing backlog maintenance at NHS Lanarkshire
NHS Lanarkshire has recognised that its backlog maintenance represents a significant challenge Its backlog maintenance is largely at Monklands Hospital With no plans to build a new hospital or dispose of Monklands the board needs to ensure the building is fit for purpose Monklands Hospital accounts for approximately two-thirds of the total backlog maintenance in the board and there are plans to spend just over pound18 million on this over the next five years As part of the boards plan to focus expenditure in this area it agreed with the Scottish Government during 201213 that it would keep its forecast surplus of pound4 million and spend part of this on backlog maintenance in 201314
To date NHS Lanarkshire has successfully reduced its total backlog maintenance by 50 per cent and the amount of significant- and high-risk backlog from pound111 million to pound34 million This focus on tackling backlog maintenance is part of a wider Property and Asset Management Strategy This includes investing approximately pound85 million in a four-year programme of works to construct and refurbish buildings and to dispose of buildings surplus to requirement
Source Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012 information provided by the Scottish Government and Property and Asset Management Strategy 2013ndash2017 NHS Lanarkshire August 2013
Exhibit 12
Audit Scotland
Exhibit 12 - Background data
Exhibit 12 - Background data
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
NHS financial performance 201213
Exhibit 12
Total and forecast backlog maintenance across Scotland 2012 to 2017
pound million
2012
2013
2014
2015
2016
2017
Low and moderate risk
521
503
485
467
449
431
Significant risk
265
195
124
54
0
0
High risk
161
75
0
0
0
0
Source Audit Scotland analysis of information provided by the Scottish Government
30 |
financial cost in the future The scope of large liabilities is reducing but there is still a risk of a potential future financial impact We also highlighted in last yearrsquos report that
bull the most recent actuarial valuation for the NHS Superannuation Scheme was for the year ending 31 March 2004
bull a more recent valuation dated 31 March 2008 had not been published due to ongoing public sector reforms
64 This position was the same for 201213 and means it is not clear if current contributions are high enough to meet the future costs of the scheme
Trends in the workforce suggest signs of pressure on NHS boards
Overall staff numbers were similar to 20111265 Staffing is the largest area of spending in the NHS in Scotland NHS boards spent pound56 billion on staff costs in 201213 51 per cent of their total spending27 The total number of whole time equivalent (WTE) staff employed increased slightly to 13320528 This is an increase of 2033 WTE staff and compares with a 2154 decrease in 201112 The increase is partly due to staff transferring from Highland Council to NHS Highland as part of the new arrangements to integrate health and social care Excluding NHS Highland the total number of staff increased by 1024 WTE (08 per cent) The WTE number of staff increased for almost all clinical staff groups The NHS has a target to reduce the number of senior managers by 25 per cent between 31 March 2010 and 1 April 2015 By March 2013 the number had reduced by 23 per cent29
There were more medical and nursing staff but vacancy rates also increased66 There was an increase in consultants and nursing and midwifery staff in post between March 2012 and March 2013 although vacancy rates for both groups also increased (Exhibit 13 page 31) In spite of the higher staff numbers the increase in vacancy rates indicates that services are still under pressure Among the mainland boards vacancy rates for nursing and midwifery staff were highest in NHS Grampian (63 per cent up from 38 per cent in March 2012) and NHS Borders (41 per cent up from 03 per cent in March 2012)30
67 Medical staff in post across all grades increased by one per cent Consultant numbers in post increased by 23 per cent However the number of doctors on training grades reduced across all grades except Foundation Year 1 (the most junior grade) which increased by 76 per cent to 962231
Increases in spending on agency and bank nurses and the private sector suggest boards needed more staff time and facilities to meet demand 68 Boards can use internal bank or external agency nursing staff on a temporary basis to increase their staffing numbers when required They may also need to use private sector healthcare providers to help deliver services for example to make sure patients are seen within waiting times targets Increases in spending on the private healthcare sector and on bank and agency nursing staff indicate that NHS boards needed to carry out more activity than they could manage with their existing staff and facilities Alongside increases in vacancy rates these indicate signs of strain in the system (Exhibit 14 page 31)
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Financial performance and sustainability | 31
Exhibit 13Trends in WTE consultant nursing and midwifery workforce March 2011 to March 2013Staff numbers and vacancy rates increased in 2013 compared with 2012
At 31 March 2011
At 31 March 2012
At 31 March 2013
increase 2012 to 2013
Consultant staff in post 44239 44277 45316 2
Consultant vacancies number and rate
1357 (298) 1673 (36) 2025 (43) 21
Nursing and midwifery staff in post
571669 564673 570366 1
Nursing and midwifery vacancies number and rate
5524 (1) 10279 (18) 16091 (27) 57
Notes1 The Mental Welfare Commission is not included in these figures2 A total of 350 staff (headcount) in the prison healthcare service transferred to the NHS in November 2011 This includes all staff groups
Source ISD Scotland workforce statistics consultant vacancies May 2013 and ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
Exhibit 14Change in spending on bank and agency staff and private sector 201011 to 201213Boards increased their use of agency and bank nurses and private sector healthcare providers
Cha
nge
in s
pend
ing
()
-20
-10
0
10
20
30
40
50
60
70
201112 to 201213201011 to 201112
Agency nursingand midwiferystaff (ISD)
Agency staff(accounts)
Bank nursingand midwiferystaff (ISD)
Private provider(accounts)
pound04mpound42m
pound44m pound37m
pound24m
pound128m pound137mpound148m
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
Exhibit 14
Audit Scotland
Exhibit 14 - Background data
Exhibit 14 - Background data
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213
Exhibit 14
Change in spending on bank and agency staff and private sector 201011 to 201213
pound000s
spend 201011
spend 201112
spend 201213
change in spending 201011 to 201112 ()
change in spending 201112 to 201213 ()
Agency nursing and midwifery staff (ISD)
4353
3939
6390
-10
62
Agency staff (accounts)
81426
77254
90045
-5
17
Bank nursing and midwifery staff (ISD)
86159
90542
104227
5
15
Private provider (accounts)
61795
65511
80289
6
23
Note The agency staffing information from the NHS board annual accounts relates to all agency staffing not just nursing and midwifery staff
Source ISD Scotland workforce statistics agency nursing and midwifery staff May 2013 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013 and NHS board annual accounts 201213
32 |
Spending on agency nurses increased by 62 per cent in 20121369 Bank staff are employed by the NHS and register to work additional hours as required Bank nursing is recommended as the most cost-effective and safe way to manage the need for additional temporary staffing hours NHS boards can also contract nursing staff through agencies Using agency staff is more expensive and should be kept to a minimum for example to cover specialist posts where bank staff are not available NHS boardsrsquo use of and spending on agency nurses increased by 62 per cent from pound39 million in 201112 to pound64 million in 20121332 Spending was highest in NHS Lothian where it more than doubled from pound12 million to pound27 million Although the amounts involved were lower spending increased significantly in three boards
bull NHS Grampian from pound70139 to pound375865
bull NHS Lanarkshire from pound13090 to pound344140
bull NHS Forth Valley from pound14383 to pound273292
70 While the total spending on agency staff is still a very small percentage of total nursing and midwifery costs the increase reverses the trend of falls in spending every year since 20080933 Spending on bank nurses across Scotland increased by 15 per cent to pound1042 million Ninety-four per cent of NHS boardsrsquo total spending on bank and agency nurses was on bank staff compared to 96 per cent in 20111234
Spending on private sector healthcare increased by almost a quarter71 Spending on private sector healthcare increased by pound148 million in 201213 to pound803 million a rise of 23 per cent compared to 201112 Across the NHS in Scotland spending on private sector healthcare accounted for less than one per cent of total spending on hospital and community health services (095 per cent)
72 Spending increased in eight of the territorial boards35 The largest rise was in NHS Lothian which had an increase of pound95 million taking its spending to pound148 million (21 per cent increase) It spent pound12 million on sending patients to have treatment in the private healthcare sector to help manage waiting lists over 80 per cent of its total spending on the private sector NHS Grampian more than doubled its spending compared to the previous year spending pound63 million It required additional theatre capacity to ensure that patients were treated in line with the requirements of the Patient Rights (Scotland) Act 2011 NHS Grampian has committed pound10 million of capital expenditure and pound8 million of recurring revenue expenditure to increase local operating theatre capacity and reduce its use of the private sector from 201415
The Treatment Time Guarantee is a further pressure on NHS boards
73 NHS boards have been focusing on achieving the TTG which came into effect in October 2012 The Scottish Government provided NHS boards with additional funding of at least pound167 million in 201213 to support TTG excluding the pound8 million brokerage to NHS Lothian36 During March 2013 18 per cent of patients (565 patients) who had inpatient or day case treatment and who were added to the waiting list after 1 October 2012 were not seen within 12 weeks37
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
Financial performance and sustainability | 33
74 Meeting the TTG continues to be a key priority for the Scottish Government and NHS boards However auditors reported that the TTG will require significant resources to achieve and sustain and has increased pressure on boards at a time when they require to make significant savings on a recurring basis (Case study 4)
Case study 4NHS Lothian challenges and financial position
In 201213 NHS Lothian met or exceeded several performance targets However it is still working on its waiting times problems initially highlighted in 201112 and has not achieved performance targets in this area NHS Lothian spent an additional pound272 million on working towards waiting times targets in 201213 This included spending on private sector healthcare other NHS boards and additional staffing and activity within the board This spending was part-funded by the pound8 million brokerage received from the Scottish Government towards improving its waiting times performance in 201213 The board has to repay the brokerage over the next two years and the amount will be offset against future increases in its NRAC allocation
NHS Lothian has recognised that it will struggle to meet waiting times targets with the funds facilities and staffing available to it This is particularly so given constraints in staff numbers in particular specialties (such as urology and vascular surgery) and the number of patients it can treat in certain facilities (such as orthopaedics and ophthalmology) It is likely to need to buy additional healthcare for its patients from other boards and private healthcare providers in the short term while it redesigns its own services It has identified that investment of pound50 million will be required to expand its internal services and fund its use of other healthcare providers over the next two years
The auditors highlighted that the cost challenges facing the board are significant and delivering recurring savings is pivotal to achieving sustainable financial balance In 201213 the board made 90 per cent of its planned savings and it relied on underspends to break even The board made less in recurring savings than planned in 201213 but forecasts that all savings will be made on a recurring basis in 201314 Auditors reported that this will be a significant challenge for the board
Source NHS Lothian Annual Audit Report 201213
75 Audit Scotland will be publishing a report on the management of NHS waiting lists in December 2013 following up on the recommendations in our February 2013 report and the Public Audit Committeersquos report38 39
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
34 |
The failure to meet some waiting times standards in 201213 suggests capacity pressures in boards
76 The NHS in Scotland has a range of HEAT targets and standards for managing NHS boardsrsquo performance and many of these relate to waiting times for patients40 41 NHS boards need to plan and manage their services well to meet these waiting times targets and standards some of which have become shorter and more challenging for NHS boards in recent years42 These are in addition to the TTG
77 NHS boards performed well against some standards in 201213 For example in the quarter ended 31 March 2013 all met the cancer waiting time standards to start treatment within 31 days of the treatment decision being made All but one met the target on waiting times for drug and alcohol treatment Most (13 boards) met the overall 18-week referral to treatment waiting time standard in March 2013 However there are signs of pressure within the system Only the National Waiting Times Centre met the separate waiting time standard for outpatients and only four boards achieved the standard for waiting times at accident and emergency departments in March 2013 Performance against the 62-day standard from urgent referral to first treatment for cancer worsened in the last quarter of 201213 Eight boards did not meet the standard compared to two boards in the previous quarter (Exhibit 15 pages 36 and 37)43
78 Delayed discharges occur when patients need to stay in hospital longer than necessary and also indicate pressure in health and social care Only seven NHS boards met the HEAT target that no patients should have a delayed discharge of more than four weeks by April 2013
79 NHS boards failing to meet some of the waiting time standards and delayed discharge targets in 201213 suggests pressure on their capacity Capacity means boardsrsquo ability to provide the level of services required with their current staffing available beds and operating theatre sessions and other resources There are risks that these pressures will increase as demand continues to grow NHS boardsrsquo spending on the private sector to get additional activity to treat patients increased in 201213 but this is not a sustainable way to meet waiting time standards Auditors have highlighted the risks of NHS boards meeting increasingly demanding targets while also making increased savings
80 The Scottish Government is continuing to work with NHS boards to help them meet waiting time standards and TTG in a way that they can maintain During 201213 NHS Fife had tailored support from the Scottish Government and another NHS board to work with them on improving their waiting times performance
81 Performance against the other HEAT targets and standards was mixed The NHS as a whole met four of the ten performance standards and four of the eight targets due for delivery in 201213 In addition some national outcome indicators relating to health have improved such as premature mortality rates with death rates from heart disease stroke and cancer falling44 The NHSScotland Chief Executiversquos Annual Report 201112 comments on overall performance against the targets45 The 201213 report will be published later this year
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
Financial performance and sustainability | 35
Boards need to plan for significant change in health and social care services in 2015
82 The Scottish Government published the Public Bodies (Joint Working) (Scotland) Bill on 28 May 2013 The Bill outlines its proposed principles for integrating health and social care across NHS boards and councils The proposed move to integrated health and social care partnerships by April 2015 will require significant service redesign in collaboration with the council partners This reinforces the need for detailed long-term financial planning so that boards understand the costs associated with their planned service models
83 NHS Highland and Highland Council are the first to formalise health and social care integration through their lead agency agreement (Case study 5 page 38) NHS Highland has highlighted financial risks around providing adult services in 201314 and the need to make savings In 201213 it received an additional non-repayable pound1 million from the Scottish Government to help it meet the one-off costs associated with health and social care integration
84 NHS Highland and Highland Council had to work through the changes in accounting treatment as a result of integration and the transfer of staff including the accounting treatment of pensions A total of 1620 staff transferred from the council to the board but stayed within the Local Government pension scheme As a result NHS Highland became an admitted member of the Highland Council Pension Fund This is a defined benefits scheme and requires significantly more accounting disclosures than the NHS Superannuation scheme which is treated as a defined contribution scheme The boardrsquos accounts now include a pension liability (pound13 million in 201213) which has long-term implications for future budgets and funding
85 In preparation for the move to integrated partnerships NHS boards and the councils within their board areas are holding discussions about the arrangements required for the move A number of boards have approved or are considering establishing shadow health and social care boards which will bring together council and health board representatives ahead of the formal move to integration in April 201546
86 The Scottish Government is monitoring progress across Scotland and sharing any learning points It has set up a series of working groups to develop guidance on specific issues such as workforce and finances and will publish further guidance later this year
87 The Scottish Parliament Health and Sport Committee is carrying out scrutiny of the Bill and invited written evidence on a number of questions over summer 2013 Audit Scotland submitted a response based on our experience and evidence from our previous audit work particularly our work on partnerships47 We welcome the principle of public bodies in Scotland delivering seamless integrated health and social care but there are a number of areas that still need to be addressed as the Bill progresses These include
bull how members of the public GPs health and social care staff will be involved in the new arrangements
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
36 |
Exhibit 15Performance against key waiting time targets March 2013 and delayed discharge targets April 2013Performance against waiting times and delayed discharge targets was mixed
Met Not met Within 5 Met for over 99 of patients
Waiting times quarter or month ended 31 March 2013
Targetstandard
Child and Adolescent Mental Health Drug and Referral to Services alcohol treatment
1(CAMHS)1 treatment2 (RTT)1 Outpatients
26 weeks 3 weeks 18 weeks 12 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash
NHSScotland
Waiting times quarter or month ended 31 March 2013 April 2013
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran
Borders
Dumfries and Galloway
Fife
Forth Valley
Grampian
Greater Glasgow and Clyde
Highland
Lanarkshire
Lothian
Orkney
Shetland
Tayside
Western Isles
National Waiting Times Centre ndash ndash ndash
NHSScotland
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
Financial performance and sustainability | 37
Waiting times quarter or month ended 31 March 2013 Waiting times quarter or month ended 31 March 2013 April 2013
Child and Adolescent Mental Health Services (CAMHS)1
Drug and alcohol treatment2
Referral to treatment (RTT)1 Outpatients1
Inpatientday case treatment time guarantee (TTG)1 3 4 AampE1
Cancer ndash urgent referral to first treatment2
Cancer ndash decision to treat to first treatment2
Delayed discharges5
Targetstandard 26 weeks 3 weeks 18 weeks 12 weeks Target standard 12 weeks 4 hours 62 days 31 days 4 weeks
Ayrshire and Arran Ayrshire and Arran
Borders Borders
Dumfries and Galloway Dumfries and Galloway
Fife Fife
Forth Valley Forth Valley
Grampian Grampian
Greater Glasgow and Clyde Greater Glasgow and Clyde
Highland Highland
Lanarkshire Lanarkshire
Lothian Lothian
Orkney Orkney
Shetland Shetland
Tayside Tayside
Western Isles Western Isles
National Waiting Times Centre ndash ndash National Waiting Times Centre ndash ndash ndash
NHSScotland NHSScotland
Exhibit 15 (continued)
Met Not met Within 5 Met for over 99 of patients
Notes1 Data for month ended 31 March 2013 There is currently a ten per cent tolerance against the CAMHS target This will be
reviewed in October 20132 Data for quarter ended 31 March 20133 TTG applies to patients added to the waiting list from 1 October 2012 only The data are for patients seen in March 20134 TTG incorporates a legal right to treatment so we have categorised this as met not met or met for over 99 per cent of patients5 Performance against this standard is based on a census at point in time The delayed discharges data are at the end of April 2013
Source Based on data from ISD Scotland and subject to any caveats described by ISD Scotland
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
38 |
bull how funding will flow under the new arrangements for example there needs to be clarity about what resources will be included in the budgets devolved to partnerships
bull the links between health and social care integration community planning and changes to childrenrsquos services
bull the implications for audit and scrutiny arrangements
bull the role of the partnership chief officers and how this will relate to the role and remit of the Board of the NHS board and council elected members
Case study 5Health and social care integration in Highland
The new partnership arrangements in Highland started officially on 1 April 2012 after 15 months of formal planning NHS Highland is the lead agency for adult community care services and Highland Council is the lead agency for childrenrsquos community health services They have joint responsibility for specifying the outcomes to be achieved and the total budgets allocated to these two service areas The adult social care budgets that were transferred from the council are large and complex and the final figure of pound89 million was not fully agreed until March 2013
For 201314 any budget increases received from the Scottish Government for adult and childrens services will be passed on in full The board received a budget increase of 28 per cent for childrens services for the year which it passed on to the council The council received no uplift for adult community care services so NHS Highland did not get any uplift for these services This means that NHS Highland will need to achieve savings to cover inflation and demographic pressures on adult services It has acknowledged that it will need to make significant savings to break even in 201314 and it has included pound37 million savings in the budget for adult services
Source NHS Highland Annual Audit Report 201213
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
Endnotes | 39
Endnotes
1 For the purposes of this report we refer to NHS National Services Scotland the Mental Welfare Commission and Healthcare Improvement Scotland as special health boards
2 NHS financial performance 201112 (PDF) Audit Scotland October 2012
3 Projected population of Scotland (2010-based) National Records of Scotland October 2011
4 The Scottish Health Survey Older Peoplersquos Health Topic Report Scottish Government 2011
5 Route Map to the 2020 Vision for Health and Social Care Scottish Government May 2013
6 The Healthcare Quality Strategy for NHSScotland Scottish Government May 2010
7 2020 Vision for Health and Social Care Scottish Government September 2011
8 Learning from adverse events through reporting and review A national framework for NHSScotland Healthcare Improvement Scotland September 2013
9 The HSMR is the ratio of the actual number of deaths within 30 days of admission to hospital to the expected number of deaths taking into account the characteristics of the patients such as the severity of illness
10 Quarterly Hospital Standardised Mortality Ratios Release ISD August 2013 The HSMR fell by 116 per cent between the periods October to December 2007 (before the SPSP was introduced) and January to March 2013
11 The boards are NHS Dumfries and Galloway NHS Grampian NHS Shetland NHS Tayside NHS Education for Scotland NHS National Services Scotland and Healthcare Improvement Scotland
12 Health Finances 2012-13 and beyond Wales Audit Office July 2013
13 The boards are NHS Ayrshire and Arran NHS Borders NHS Dumfries and Galloway NHS Fife NHS Forth Valley NHS Highland NHS Lothian and NHS Tayside
14 NHS Dumfries and Galloway forecast 100 per cent recurring savings for 201213 The board delivered five per cent more savings than its target and this had an impact on the split between recurring and non-recurring savings We have assumed that all target savings were achieved recurrently with additional savings made on a non-recurring basis This also applies to the National Waiting Times Centre Healthcare Improvement Scotland and the Scottish Ambulance Service
15 Prescribing amp Medicines Prescription Cost Analysis Financial Year ndash 201213 ISD Scotland June 2013 The total net cost of items dispensed in general practice in 201213 was pound112 billion
16 ISD Scotland analysis of spending on hospital drugs in 201213 from the Hospital Medicines Utilisation Database (HMUD) The total spending of pound342 million on hospital drugs in 201213 excludes NHS Tayside as their data were not included in HMUD
17 The Scottish Governmentrsquos LDP guidance requires boards to categorise savings by six themes clinical productivity workforce drugs and prescribing procurement support services and estates and facilities NHS Scotland Local Delivery Plan Guidance 201213 Scottish Government 2011
18 Prescribing in general practice in Scotland (PDF) Audit Scotland January 2013
19 The boards are NHS Borders NHS Forth Valley NHS Tayside and Scottish Ambulance Service
20 Scottish Government Financial Performance Returns 201314
21 The Scottish Government requires NHS Borders NHS Lanarkshire NHS Tayside and all special boards to submit LDPs for three years only All other boards submit LDPs for five years NHS National Services Scotland and NHS 24 submitted plans for five years rather than three years
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
40 |
22 The boards are NHS Fife NHS Forth Valley NHS Greater Glasgow and Clyde NHS Lothian and NHS Western Isles
23 Annual state of NHSScotland Assets and Facilities Report for 2012 Scottish Government 2012
24 Information provided by Scottish Government
25 The five boards are NHS Borders NHS Greater Glasgow and Clyde NHS Highland NHS Lothian and NHS Tayside In 2012 NHS Highlandrsquos total included for the first time backlog maintenance in approximately 45 properties owned by Highland Council but which the board uses to provide services
26 Scottish Government letter to the Scottish Parliament Public Audit Committee 16 January 2013
29 25 Reduction in Senior Management Posts Target ndash National Progress Towards 25 Reduction as at 31st March 2013 Scottish Government August 2013
30 ISD Scotland workforce statistics nursing and midwifery vacancies May 2013
31 ISD Scotland workforce statistics HCHC staff by grade May 2013
32 ISD Scotland workforce statistics agency nursing and midwifery staff May 2013
33 Ibid
34 ISD Scotland workforce statistics bank nursing and midwifery staff May 2013
35 The eight boards are NHS Ayrshire and Arran NHS Fife NHS Forth Valley NHS Grampian NHS Lanarkshire NHS Lothian NHS Shetland and NHS Tayside
36 Scottish Government allocation letters to NHS boards 201213
37 ISD Scotland waiting times patients added to inpatient day case and outpatient waiting lists from 1 October 2012 May 2013
38 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
39 3rd Report 2013 (Session 4) Report on the management of patients on NHS waiting lists Scottish Parliament Public Audit Committee May 2013
40 The NHS is working to a number of HEAT targets and standards These relate to Health improvement for the people of Scotland Efficiency and governance improvements Access to services Treatment appropriate to individuals
41 Where due dates for targets have passed the target becomes a standard
42 Management of patients on NHS waiting lists (PDF) Audit Scotland February 2013
43 Scotland Performs NHSScotland performance against the HEAT targets and standards
44 Scotland Performs Performance against the national indicators
45 NHSScotland Chief Executiversquos Annual Report 201112 Scottish Government November 2012
46 This includes NHS Ayrshire and Arran NHS Fife NHS Grampian and NHS Lothian
47 PBJW0066 ndash Audit Scotland on Behalf of the Auditor General for Scotland and the Accounts Commission Written Responses on Public Bodies (Joint Working) (Scotland) Bill Scottish Parliament Health and Sport Committee August 2013
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
Appendix 1 Financial performance of NHS boards in 201213 ndash Total revenue and capital | 41
Appendix 1Financial performance of NHS boards in 201213 ndash Total revenue and capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
42 |
Appendix 2Financial performance of NHS boards in 201213 ndash Revenue
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
Appendix 3 Financial performance of NHS boards in 201213 ndash Capital | 43
Appendix 3Financial performance of NHS boards in 201213 ndash Capital
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
ISBN 978 1 909705 15 9 AGS201310
NHS financial performance 201213This report is available in PDF and RTF formats along with a podcast summary at wwwaudit-scotlandgovuk
If you require this publication in an alternative format andor language please contact us to discuss your needs 0845 146 1010 or infoaudit-scotlandgovuk
For the latest news reports and updates follow us on Twitter or subscribe to our email delivery service
AuditScotland
Subscribe to updates
This publication is printed on 100 recycled uncoated paper
Audit Scotland 110 George Street Edinburgh EH2 4LHT 0845 146 1010 E infoaudit-scotlandgovukwwwaudit-scotlandgovuk
Summary
Key messages
Financial performance and sustainability
Endnotes
Appendix 1
Financial performance of NHS boards in 201213 ndash Total revenue and capital
Appendix 2
Financial performance of NHS boards in 201213 ndash Revenue
Appendix 3
Financial performance of NHS boards in 201213 ndash Capital
